The Urgent Need to Reform the FAA's Air Traffic Control System

About the Author

The U.S. economy
depends on safe, reliable, and affordable air transportation.
Beginning in 1978, airline deregulation transformed commercial
aviation from a luxury for the few to a service available to
essentially all Americans. U.S. companies depend on the airlines to
transport their employees, and a growing number of all sizes make
use of business aviation: corporate jets and turboprops, air taxi
services, and fractional-ownership programs.

This ubiquitous
and affordable air transportation depends critically on the U.S.
aviation infrastructure, which consists of airports owned and
operated by local government agencies and the air traffic control
(ATC) system owned and operated by the Federal Avi­ation
Administration (FAA).

The steady growth
in aviation activity was inter­rupted in 2001 by the 9/11
attacks and by a recession, but flight activity returned to
pre-recession levels by 2005, and significant summertime congestion
has reemerged. The FAA and other aviation experts pre­dict
serious trouble over the next two decades, driven by continued
aviation growth.

First, a
growing number of air travelers are flying in planes of smaller
average size as narrow-body planes replace wide-body planes,
regional jets replace nar­row-body planes, and business jets
replace regional jets. This is increasing the number of planes that
the ATC system needs to control significantly faster than the
number of air travelers is growing, exacerbating the FAA's funding
problem.

Second,
this increased volume of air traffic will soon bump up against
inherent limits of the current air traffic control system.

In 2003, Congress
acknowledged the serious­ness of the ATC problem in the Vision
100 re­authorization of the FAA[1] by creating the Joint
Planning and Development Office (JPDO) to plan for and coordinate
the transition to a Next Gener­ation Air Transportation System
(NGATS). NGATS would be a major redesign of aviation
in­frastructure, aimed at replacing the traditional methods of
separating planes "by hand" with a far more automated,
technology-intensive system that could triple air traffic capacity
by 2025. The JPDO effort is chaired by the Secretary of
Trans­portation, with active participation of the
Depart­ment of Commerce, the Department of Defense, the
Department of Homeland Security, the FAA, the National Aeronautics
and Space Administration (NASA), and the White House Office of
Science and Technology Policy, as well as considerable
in­volvement by the private sector.

As part of its
early efforts, the JPDO modeled future demand for air travel and
compared it to a business-as-usual scenario of continued modest
annual increases of airport and ATC capacity. It concluded that
"the demand scenarios quickly out­strip current and anticipated
[ATC] capacities…. At higher levels of demand, system delays
quickly rise over the course of a simulated day to untenable
levels." The JPDO white paper summarized the sit­uation: "These
extreme delays indicated that antic­ipated 'baseline' levels of
current and future capacity will be inadequate for providing even
min­imally acceptable levels of service quality for National
Airspace System users."[2]

The JPDO has
estimated that not expanding the system's capacity by 2020
will cost the U.S. econ­omy $40 billion per year. The white
paper noted that, when demand exceeds the system's capacity,
preventing untenable delays will require "a proce­dure or
algorithm for 'trimming' flights from the ini­tial demand
scenario until [existing capacity] is able to serve the 'trimmed'
demand while meeting the agreed-upon service quality standard."

In other words,
failure to expand ATC capacity will force significant rationing of
airline and busi­ness aviation flights. This will significantly
increase the average price of the restricted flights, and some
valuable trips could not be made at all.

The leaders of
the U.S. Chamber of Commerce have said that, unless the United
States acts soon to address this fundamental problem with aviation
infrastructure capacity, the consequences could be "devastating."
To avoid this crisis, they have called for designing and setting up
an ATC system that can safely and efficiently handle this heavier
demand.[3]

Tripling
Capacity

The JPDO is well
along in fleshing out a techno­logical and operational concept
for the Agile Air Traffic System, the ATC component of the overall
Next Generation Air Transportation System.[4] Its basic premise is that
system capacity is not a law of nature, but rather a function of
the technology and operational concept employed.

The purpose of
air traffic control is to keep planes from running into each
other-more technically, to provide safe separation between planes
in all phases of flight, including on the ground. Before radar was
used to separate aircraft, controllers on the ground used
procedural separation methods: rules that specified how far apart
planes must stay along a given flight path (in-trail separation)
and between different altitudes. When planes and controllers can
only approximate aircraft latitude, longitude, and altitude, the
rules call for huge separation margins to allow for large
errors.

The introduction
of radar over the land area of the United States in the 1950s and
1960s allowed reduction of lateral and in-trail spacing, since
con­trollers were able to determine approximately where each
plane was. Within the past few years, more precise altimeters have
allowed reductions in the required vertical separation of jet
cruising alti­tudes, thereby increasing the number of "flight
lev­els" for the en route portion of flights. The increasing
availability of GPS units on both airliners and business jets means
that pilots themselves have much more accurate information on their
locations, although current ATC practices make very little use of
this capability.

While the
accuracy of locational information has increased over the past
several decades, the funda­mental concept of ATC is still the
manual model developed prior to World War II. Thus, before every
significant action, a pilot must receive permission from an air
traffic controller on the ground, who watches a traffic display and
tells the pilot what to do and when. Even though a great deal of
"intelli­gence" is built into most airliners' flight
manage­ment system computers, pilots are not allowed to use it
unless authorized by a controller.

Furthermore,
planes are still controlled largely "by hand" because, while
controllers' displays have been modernized for the most part,
controllers have been given very few automation tools to predict
conflicts or to manage large amounts of information in short
periods of time. Because of the understand­able limits on how
much information a controller can manage at a time, the system must
retain very large separation margins fore and aft, left and right,
and above and below each plane to ensure safe operations.

The premise of
the next-generation system is that many routine functions can be
automated by obtaining and sharing precision real-time
informa­tion about planes in flight and the weather and that
the separation responsibilities can be shared among control centers
on the ground and cockpits in the air. Some have termed this model
network-centric air traffic management (ATM) as opposed to
the tra­ditional human-centric air traffic control.
Planes can safely fly much closer together with far more
pre­cise, real-time information on:

Each plane's exact location and heading (its intention);

Weather conditions throughout the system; and

The extent and duration of the vortices that spin off a plane's
wings. These vortices can be hazardous to following aircraft during
landings and takeoffs.

This reduction in
separation distances could double or triple system capacity.

The
network-centric model could greatly improve the quality of air
service, both airline and non-airline. The major breakthrough is to
let auto­mation on the ground and in the aircraft perform
routine functions and separate aircraft based on their known flight
profiles. The controller's role would change dramatically:
Automation would manage the flights and monitor conformance with
clearances and planned trajectories, and the con­troller would
manage exceptions.

In the aircraft,
synthetic vision techniques now in field-testing will enable planes
to land in low-visi­bility conditions that today frequently cut
airport arrival rates in half. Other new technologies will provide
"precision approaches" to thousands of smaller airports at far less
cost than traditional instrument landing systems. More precise
informa­tion about planes' positions and their tip vortices
will allow planes to use closely spaced parallel run­ways
simultaneously. Some airports could even add an additional parallel
runway without having to enlarge their physical land areas.

Shifting to the
new model should also produce large cost savings. One premise of
the network-cen­tric approach is that control of aircraft will
be possi­ble from anywhere to anywhere.
Historically, ATC facilities have been located adjacent to the
airspace that they control. A tower is physically at the
air­port, and each TRACON (Terminal Radar Approach Control) and
each of the 21 en route centers is located within the regional
airspace it controls. However, with satellites, dispersed sensors,
and high-speed data links, facilities can be located virtu­ally
anywhere and be sized to do an economically efficient amount of
work. Some tentative plans call for replacing the FAA's 21 centers
and 171 TRACONs-most of them fairly old-with 35 new service hubs.[5]
Thousands of costly-to-maintain ground radars and other navigation
aids (navaids) could be retired once planes are equipped for
net­work-centric operations.

While all of the
details are not yet finalized, experts from the federal agencies
sponsoring the JPDO (especially NASA and the Departments of Defense
and Transportation) agree that the net­work-centric ATM model
can double or triple the system's capacity and cost no more-and
perhaps less-to operate than the current system. This means major
productivity gains in a field in which productivity has not
fundamentally changed since radar was introduced. This prospect
contrasts starkly with the dismal vision of congestion and
rationing if aviation continues business as usual.

Obstacles to
Implementing the
Next-Generation System

This vision of a
network-centric ATM system faces several serious obstacles. Some
are the normal kinds of resistance to change from those who are
comfortable with the status quo. For example, the air traffic
controllers union has resisted early moves toward automation
technologies and has clearly expressed its preference for retaining
a human-cen­tered ATC system over the next several decades.
Some aircraft operators (including some airlines and many private
pilots) are resistant to any man­dates to install new onboard
avionics equipment, even though full benefits for all system users
(such as large cost savings from retiring costly ground-based
navaids) can be realized only after all planes in the system are
properly equipped.

Three more
fundamental obstacles pose even more serious threats: lack of
funding, high modern­ization risks, and political
constraints.

Lack of
Funding. As FAA Administrator Marion Blakey and
then-Transportation Secretary Norman Mineta said repeatedly in 2005
and 2006, the changes in aviation over the past decade have
devas­tated the FAA's funding base. A large majority of the FAA
budget-the ATC system accounts for nearly two-thirds-comes from
aviation excise taxes, and the lion's share of the tax revenue
comes from the 7.5 percent tax on the price of airline tickets.

The long-term
trends of declining ticket prices due to increased market share for
low-cost carriers and increasing air traffic due to increased use
of smaller planes have put a serious squeeze on ATC funding.
Payroll costs of the labor-intensive human-centric ATC system
consume most of the available budget, leaving little for capital
investment. In fiscal year (FY) 2005 and FY 2006, the FAA budget
for facilities and equipment was reduced by 20 percent ($500
million) below the authorized levels.

The transition to
NGATS will require major capi­tal investments over the next two
decades to install new technologies and to replace numerous
obsoles­cent facilities with a much smaller number of new ones.
The cost estimate produced by the FAA's Research, Engineering, and
Development Advisory Committee-the only estimate available so
far-is an extra $1 billion per year over the next 20 years.[6] The
FAA's current capital spending budget is focused on patching up the
existing system, replac­ing antiquated display consoles with
newer ones, and replacing the host computer system. While
nec­essary in the short term, these investments will add little
capacity to the system, but they are all that the FAA can afford
under the current funding system.

Some, especially
in the general aviation commu­nity, argue that Congress could
solve the problem by appropriating a larger amount of general
federal revenue each year, such as 25 percent to 30 percent of the
FAA's budget instead of the recent level of about 18 percent to 21
percent. Yet given the federal budget deficit and numerous other
claims on gen­eral-fund monies, this alternative appears
extremely unlikely, especially for a program that has the potential
to raise revenue from its users. This is why Blakey and Mineta have
called funding reform essential for ATC modernization.

Technology
Implementation Risks. The FAA has been attempting to modernize
the National Air­space System (NAS), expanding its capacity and
increasing its productivity, since it launched the NAS Plan in
1982. During the next 25 years, scores (if not hundreds) of reports
from the Government Accountability Office (GAO)[7] and the Office of
Inspector General (OIG) in the U.S. Department of Transportation
(DOT) faulted the agency for bad management that had led to
projects that were chronically late and seriously over budget.

In 2005, two OIG
researchers presented an over­view of this failed modernization
experience, trying to assess what went wrong.[8] They concluded that
FAA modernization efforts had neither reduced costs nor increased
productivity:

NAS modernization
architecture and project designs have been consistently subverted
by requirements growth, development delays, cost escalations, and
inadequate benefits management. But all these things were
symptomatic of the fact that FAA didn't think it needed to reduce
operating costs.[9]

Thus, many
observers are greatly concerned that the FAA's institutional
culture is poorly suited to implementing anything as dramatic as
the shift from human-centric ATC to network-centric ATM. In late
2004, the National Academy of Sciences convened an expert panel to
assist the GAO in understanding the cultural and technical factors
that have impeded previous ATC modernization efforts.[10] It
found that "the key cultural factor impeding modernization has been
resistance to change…[which is] characteristic of FAA
personnel at all levels" and that "the key technical factor
affecting modernization…has been a shortfall in the
technical expertise needed to design, develop, or manage complex
air traffic systems."[11]

The FAA is not
designed to take risks, make investments, manage people to produce
results, reward excellence, or punish incompetence. It is therefore
not equipped to effect fundamental reform of the ATC system. Thus,
major institutional change is probably a prerequisite for
implementing the pro­posed network-centric ATM system.

Political
Constraints. The third impediment to implementing a
fundamentally different approach is political. The network-centric
model can deliver major cost savings, ultimately providing two to
three times the ATC capacity with the same number of-or even
fewer-people because the changed paradigm makes the operations
dramatically less labor-intensive. However, realizing these gains
requires relatively swift retirement of huge numbers of costly
radars and other ground-based navaids and consolidation of numerous
ATC facilities. One current proposal would replace 21 en route
centers and 171 TRACONs with 35 air traffic service hubs while
redesigning all U.S. airspace.[12] Physical con­trol
towers located at each airport would gradually be phased out as
"virtual tower" functions are built into the new super-hubs.

As with the
closing of military bases, Congress has a history of resisting the
closure and consolida­tion of ATC facilities. The original 1982
NAS Plan included plans for facility consolidation, which were
quietly dropped after it became clear that get­ting them
through Congress would be very difficult. Congress came extremely
close to forbidding the FAA's recent success in outsourcing its
Flight Service Station system, which involved consolidating from 58
facilities to 20 facilities. The prohibition was ulti­mately
defeated due to a credible veto threat from the White House. Many
observers expect that, if left to the annual appropriations
process, a facility con­solidation of the magnitude being
considered for the next-generation system would suffer the same
fate as the consolidations proposed in the NAS Plan.

An Institutional
Alternative: A Self-Supporting Air Traffic Organization

One approach to
addressing all three obstacles is to take the ATC system out of the
federal budget process and make it a self-supporting entity, funded
directly by its customers, analogous to the Tennes­see Valley
Authority (TVA) or the U.S. Postal Service (USPS). Variants of this
approach have been recom­mended by a series of federal studies
and commis­sions over the past 15 years, including:

The Aviation Safety Commission in 1988,

The National Commission to Ensure a Strong Competitive Airline
Industry in 1993,

The National Performance Review in 1993,

The Secretary of Transportation's Executive Oversight Group in
1994, and

The National Civil Aviation Review Commis­sion (Mineta
Commission) in 1997.

Funding
Problem. This approach would address the funding problem by
shifting from aviation excise taxes that are paid to the Treasury
and appro­priated annually by Congress to fees for ATC
ser­vices that are paid directly by customers to the new
self-supporting Air Traffic Organization (ATO). Thus, fees would
grow in proportion to the growth of flight activity rather than
being tied to something much less relevant, such as airline ticket
prices. Moreover, a predictable revenue stream, not subject to the
federal budget process, would provide the basis for issuing
long-term revenue bonds to fund modernization, in particular the
transition to the network-centric system.

Cultural and
Technical Obstacles. The com­mercialization approach would
address the cultural and technical obstacles by enabling the ATO to
attract and retain private-sector managers and engi­neers who
are skilled at implementing complex technology projects. The ATO,
like the TVA, would operate completely outside the federal civil
service system and could hire, fire, and compensate its employees
as any other high-tech business does. It would be governed by a
board of directors largely representing the aviation customers.

Under this
system, the overall NGATS approach, individual projects, and their
implementation schedules would have to pass muster as delivering
real value for the investment. That kind of vetting process is
largely absent from the FAA.

Political
Obstacles. A self-supporting ATO would also address the
political obstacles to retiring navaids and consolidating
facilities. By passing the enabling legislation, Congress would
delegate these contentious issues to the customer-governed ATO.

Of course,
persuading Congress to pass the enabling legislation is no small
challenge. It is anal­ogous to the problem of military base
closings. Members of Congress found it almost impossible to allow
the Pentagon to close bases in their individual districts, with the
result that obsolete bases were almost never shut down. To resolve
the problem, Congress created the Base Realignment and Closure
(BRAC) Commission in 1988 to make recommen­dations on which
bases to close, shrink, or expand. Congress must then either accept
or reject the entire package without amendment. The success of the
first BRAC round has prompted three more rounds, which serve the
national interest by making the mil­itary more
cost-effective.

Congress could
similarly vote one time to autho­rize a self-supporting ATO,
thereby delegating the contentious tasks of consolidating numerous
ATC facilities and shutting down thousands of navaids. By
constraining itself from future temptations to intervene, Congress
would safeguard the process of modernization (and avoid threatening
the invest­ment-grade ratings of the revenue bonds issued to
finance the modernization process).

Foreign
Models. At first blush, this reform may sound like a utopian
prospect, but over the past 20 years, several dozen countries have
reformed their ATC systems along these lines, transforming them
from tax-supported government depart­ments to self-supporting
air navigation service providers (ANSPs).

Commercialized
ANSPs in Other Countries

New Zealand
converted its ATC operation from a division of its Ministry of
Transport to a self-sup­porting government corporation in 1987;
since then, more than 40 countries have done likewise. All of these
commercialized ANSPs belong to the Civil Air Navigation Services
Organization (CANSO), which has become an active participant in
international aviation discussions and policy debates. Table 1
provides a brief overview of 10 of the leading commercialized
ANSPs, which range from government departments (e.g., France) to a
private, nonprofit corporation (Canada).

Experts consider
financial autonomy the basic prerequisite for a commercialized
ANSP, regardless of ownership or placement within or outside of
gov­ernment departments, such as transport ministries.
Financial autonomy requires that the ANSP:

Fund its operations by means of direct charges to its customers
and

Have access to the capital markets to finance major technology
and facility projects.

Because ANSPs
continue to have a monopoly on provision of ATC services within
their airspace, all of them are subject to some form of economic
regulation. Further, because their countries are sig­natories
to the International Civil Aviation Organi­zation (ICAO), they
are also subject to arm's-length safety regulation.

Only three of the
10 ANSPs in Table 1 can be considered "privatized" in the sense of
being outside of government (the governments of the United Kingdom
and Switzerland continue to own major blocks of shares of NATS and
Skyguide, respec­tively). The large majority of CANSO member
ANSPs are government corporations. Yet, by definition, all are
financially self-supporting and free to make business decisions on
an ongoing basis, subject only to some kind of economic regulation
and, of course, air safety regulation.

The GAO
Study. In 2005, the Government Accountability Office conducted
the first of several large-scale assessments of the performance of
com­mercialized ANSPs.[13] The GAO selected five major
ANSPs-Australia, Canada, Germany, New Zealand, and the United
Kingdom (U.K.)-and GAO staff collected data and made site visits to
all five. Among the findings were the following:

Safety.
"Available data from the five ANSPs indicate that since
commercialization, the safety of air navigation services has
remained the same or improved."

Cost
Control. "All five ANSPs have taken steps to control their
operating costs, whether by eliminating some administrative
positions or by consolidating facilities."

Modernization. "All five ANSPs
have also invested in new technologies and equipment, which the
ANSPs say have lowered their costs by increasing controllers'
productivity and pro­duced operating efficiencies, such as
fewer or shorter delays."[14]

The GAO's report
notes that the reasons for com­mercialization were similar in
all five countries:

Before
commercialization…[m]any were un­derfunded, as evidenced
by freezes on air traffic controllers' wages and insufficient funds
to replace aging technologies. Technol­ogy replacement programs
often cost more, took longer, and delivered less than
prom­ised, and stakeholders complained about performance and
customer service. In some cases, the country as a whole faced
wide­spread fiscal problems, and the commercial­ization of
air navigation services was simply part of a larger movement to
reform govern­ment enterprises.[15]

The same problems
still beset the FAA's Air Traffic Organization today.

The report goes
into some detail to explain what it means for an ANSP to operate as
a commercial entity, albeit usually within government. "Each ANSP
makes and carries out its own strategic, oper­ating, and
financial decisions," reports the GAO. "A supervisory board
oversees policy making and operations, and, when applicable, has
fiduciary responsibility to stakeholders." As in a corporation:

An executive
officer implements the ANSP board's policies and is, in turn,
accountable to the board. Individual business units within the ANSP
report to the CEO [chief executive officer] and are directly
responsible for various aspects of the ANSP's day-to-day
operations.[16]

The ANSPs
establish performance measures and report annually on operational
and financial perfor­mance. Their financial statements are
subject to independent third-party audits.

Financial
autonomy means that the ANSPs "rely on user charges as their
primary source of revenue and on capital markets for additional
funding." The charges are based on the ICAO's cost-recovery
prin­ciples and cover oceanic, en route, and terminal-area
services. General aviation users may be charged a flat fee for
access to the system rather than the per-transaction charges that
apply to air­lines. ICAO policies allow for the costs of some
ser­vices not to be recovered via charges "in recognition of
local, regional, or national benefits." The GAO notes that, in
Canada, flights for search and rescue, air ambulance, and
firefighting are exempt from user charges. ANSPs may also
gener­ate revenues from miscellaneous business services, such
as consulting, training, and the provision of ATC services in other
countries.[17]

In accordance
with ICAO principles, all five ANSPs are subject to economic
regulation, prima­rily to protect users who must obtain their
ATC ser­vices from the provider in question. The report goes
into some detail on the different ways in which this regulation is
carried out in the five countries.

The GAO also
concluded that "[c]ommercializa­tion has allowed the ANSPs to
implement modern­ization projects more efficiently." The
uncertainty of annual appropriations had made it difficult for them
to plan multi-year projects, but access to their own cash flow,
along with the proceeds from issuing rev­enue bonds, "has
allowed them to plan and execute projects more efficiently and has
improved their ability to deliver projects on time, within budget,
and to specifications."

The ANSPs have
also found that "involving stake­holders in efforts to design,
acquire, and deploy new technologies can be beneficial." This
involve­ment continues through the design and
implemen­tation process. In addition to involving customers,
the ANSPs have found it valuable to involve air traf­fic
controllers throughout the process.[18]

The MBS Ottawa
Study. MBS Ottawa, a con­sulting firm, in conjunction with
George Mason University, Syracuse University, and McGill
Uni­versity, conducted a larger and more detailed study of the
performance of commercialized ANSPs, which was published in January
2006.[19] The project was overseen by a 15-member
inter­national advisory committee. The project team made site
visits to and collected detailed quantita­tive data from the 10
commercialized ANSPs listed in Table 1, including all five that
were stud­ied by the GAO. In addition to documenting the
performance of the ANSPs since they were com­mercialized, the
study and its appendix provide considerable detail on the
governance structure and institutional framework of each.

Overall, the MBS
study judged ATC commercial­ization to be a success. With
respect to commercial­ization's impact on key performance
measures, trend analysis found that:

Safety was neutral or enhanced;

Modernization was greatly improved;

Service quality was improved;

Costs were generally reduced, significantly in some
cases;

Financial stability was maintained; and

Public interest was neutral or positive in most areas.

The MBS's "major
finding is that commercialization models that provide the right
balance of incentives have resulted in significant cost reductions,
dramatic improvements in modernization, and major improve­ments
in service quality, while improving safety." One of the most
interesting findings is that:

Providing more
autonomy for the ANSP has tended to cause a reorientation from
treating government as the primary client to respond­ing to the
needs of the aviation community. There is no longer any doubt as to
who the customer is. Commercial ANSPs have dem­onstrated
enhanced ability to respond quickly to customer needs.[20]

In addition, the
report notes:

[T]here has been
a…clarification of the government's role. Governments have
en­sured the public interest through effective safety and
economic oversight, financial regulations, environmental laws,
protection of consumer rights, and recourse through the legal
system.[21]

Summarizing the
findings, the report notes that:

Commercialized
ANSPs exhibit three main strengths-sensitivity to customer needs,
agility in reaching a decision, and ability to carry it through.
These characteristics have led to continuous improvements in
efficiency, business discipline that delivers projects on schedule
and on budget, and rapid deploy­ment of modern technology to
enhance ser­vice quality.[22]

The IBM
Study. Clinton Oster and John Strong researched and wrote the
most recent study, which was published in mid-2006 by the IBM
Center for the Business of Government.[23] Their report focused on
applying lessons learned from the ATC commer­cializations in
Canada and the U.K. to reforming the U.S. system. Thus, the report
provides three parallel studies of ATC reform: the long history of
efforts to reform the FAA and case studies of the
commercial­izations of NAV CANADA and NATS. (FAA reform is
discussed in the next section of this paper.)

The IBM study
provides considerably more detail on how both NAV CANADA and NATS
were cre­ated in an effort to solve long-standing problems in
the provision of ATC services. Although their orga­nization
models are quite different and both had to cope with the serious
downturn in North Atlantic airline traffic for several years after
9/11, the authors conclude:

[B]oth NAV CANADA
and NATS have emerged from the 2001-2004 period as fi­nancially
solid organizations that are both well positioned not only to
modernize to meet the growing needs of their own air­space, but
also to extend their provision of various air traffic management
services to other parts of the world.[24]

Several other
lessons specific to NAV CANADA are worth highlighting. Unlike most
European and Asia-Pacific countries, where ATC user charges have
been in effect at least since the end of World War II, Canada was
one of the few remaining coun­tries that funded ATC by taxing
airline tickets prior to ATC commercialization. Reflecting on that
transi­tion, the authors conclude that:

The adoption of a
user charge system in principle increased the desire for users to
play a role in governance. The not-for-profit structure with board
representation by stakeholders creates good incentives for cost
control and improved capital program management, and reduces the
need for eco­nomic regulation.…

The customer
orientation appears to extend to a capital program and planning
approach that has been much better at both modern­ization and
the development of new tech­nology, with respect to cost,
delay, and performance.[25]

Turning to the
need for NAV CANADA to cope with the economic downturn following
9/11, the authors conclude that:

Nav Canada's
organization structure turned out to be an asset…. The
stakeholder model in effect required all parties to make
contri­butions and sacrifices. The nonprofit status established
a clear financial objective dur­ing the period, while the rate
stabilization fund allowed the company to manage the consequences
of the downturn over a longer period.[26]

[1] Vision
100-Century of Aviation Reauthorization Act, Public Law
108-176.

[6] Financing Next
Generation Air Transportation System Working Group, "Financing the
Next Generation Air Transportation System," Federal Aviation
Administration, Research, Engineering and Development Advisory
Committee, April 2006.

[7] Before July
2004, the GAO was known as the General Accounting Office.

[10] U.S.
Government Accountability Office, National Airspace System:
Experts' Views on Improving the U.S. Air Traffic Control
Modernization Program, GAO-05-333SP, April 2005, at www.gao.gov/new.items/d05333sp.pdf
(February 7, 2007).

[13] U.S.
Government Accountability Office, Air Traffic Control:
Characteristics and Performance of Selected International Air
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